KUALA LUMPUR, Sept 4 — The rental rates for prime office locations here fell by 0.2 per cent in the second quarter, property consultant Knight Frank Malaysia said.
The firm cited factors such as oversupply and difficulty attracting new tenants as among the reasons for the decline recorded in its Asia-Pacific Prime Office Rental Index for the second quarter of 2019.
Knight Frank Malaysia's corporate services executive director Teh Young Khean said rent in KL remained “under pressure”.
“Faced with the high impending office supply driven by new construction, prime grade office rents in KL city continue to be under pressure with landlords competing to attract new occupiers as well as to retain existing tenants," he said in a statement.
KL was one of 20 cities tracked by the index in which overall 14 cities recorded either stable or increased rents, compared to 15 cities in the first quarter. Overall the index rose 0.9 per cent quarter-on-quarter, a reverse of the decline seen in Q1.
At the top of the list is Tokyo with a 6.9 per cent quarter-on-quarter rise, due to limited supply of prime office space. Other Asia-Pacific office markets saw growth on a smaller scale.
This includes Sydney at 1.3 per cent, and Singapore at 0.9 per cent for its prime office rentals.
In contrast, Hong Kong office rental rates declined by one per cent in the past quarter, driven by uncertainty over the US-China trade tensions and softer economic conditions.
Closer to home, prime office rent in Manila, Philippines, rose by 1.9 per cent due to landlords putting out new better-quality products, enabling them to command higher rents which are also driven by higher demand from the rapidly expanding Philippine Offshore Gaming Operators sector.
In Singapore, Grade A office rents were up 0.9 per cent quarter-on-quarter on healthy net absorption, led mainly by the rapidly expanding co-working sector.